The collapse of Edinburgh Woollen Mill (EWM) has resulted in a significant £50 million deficit for unsecured creditors, as revealed by documents filed by FRP Advisory, the administrators overseeing the company. These creditors, which include suppliers, the HM Revenue and Customs (HMRC), landlords, and a pension scheme, are now facing substantial financial losses. Among them, the largest portion is owed to the pension scheme, with a staggering £17.5 million owed by EWM. Suppliers also face a substantial amount of debt, with £11.4 million owed, including over £1.5 million to suppliers in Bangladesh and Sri Lanka. The HMRC is owed £10.5 million, while landlords such as Colliers International are owed £9.3 million.

In addition to these unsecured creditors, EWM also has a debt of £140 million to its parent company, The Edinburgh Woollen Mill Group. As a secured creditor, the parent company is expected to have a higher priority in receiving the owed amount. However, it is unlikely that the EWM Group will be able to recover the full amount owed to them.

Since the appointment of administrators in early November, some retail units have been forced to shut down, resulting in the loss of 860 jobs. The remaining stores were allowed to continue operating up until the Christmas period, but the recent Covid-19 restrictions have now forced their closure. If a buyer cannot be found, an additional 2,000 jobs are at risk.

This collapse adds to the growing struggles faced by the fashion industry, which has been severely impacted by the ongoing Covid-19 pandemic. Nationwide restrictions and reduced consumer spending have forced many retailers to close stores and lay off employees.

FRP Advisory, the administrators, are now tasked with assessing the financial situation of EWM and exploring options for a potential buyer. The objective is to secure a sale that will preserve as many jobs as possible and repay a portion of the outstanding debts to creditors. However, finding a buyer in the current economic climate, coupled with the effects of the pandemic, may prove to be a challenging task.

The collapse of Edinburgh Woollen Mill serves as a reminder of the vulnerability of retail businesses in the current climate. As the pandemic continues to disrupt the industry, it is crucial for companies to adapt and innovate in order to survive. This includes diversifying revenue streams, investing in online platforms, and prioritizing the health and safety of employees and customers.

The future of EWM remains uncertain, but with the support of the administrators and potential buyers, there is hope that the brand can be revived and jobs can be saved. In the meantime, the creditors will have to face the reality of substantial financial losses and await a resolution to their claims.

For more information on the collapse of Edinburgh Woollen Mill and its impacts:
BBC: Edinburgh Woollen Mill expects to appoint administrator FRP
Gov UK: Retail crisis as Edinburgh Woollen Mill Group calls in the administrators